BAIRD: Tesla’s Gigafactory is ramping up — and it hands the carmaker a huge advantage

Tesla began constructing its Gigafactory in 2014, and says that to reach its end-of-2018 goal, it would require the factory’s output to equal what is produced worldwide today. That’s a lot of batteries and a big bet on the future of cars.

According to Ben Kallo, an analyst at Baird, the Gigafactory bet is paying off though, and Tesla’s battery-producing Gigafactory is “on track” to hit its production targets for the year.

The Gigafactory is in the process of ramping up its production to meet the huge demand for Tesla’s Model 3. Right now, the factory is only 30-35% complete, according to Kallo’s estimates. The company hopes to produce 50 gigawatt hours worth of batteries in 2018, which would be the rough equivalent of 1 million 50 kilowatt hour batteries which power the entry-level Model 3.

“Activity at the Gigafactory has increased since our tour in January, and we believe cost reduction and capacity expansion efforts are on track,” Kallo said in a note to clients. “Tesla will continue to have a battery cost advantage over competitors given its scale of production [of the Gigafactory] in Nevada.”